Nifty forms negative candle at record highs; how to trade next week

Trade for the month of October:

Nifty forms negative candle at record highs; how to trade next week.

After reaching new highs, the Nifty50 index shows signs of pausing for a breather. The formation of a small negative candle on the daily chart suggests a potential shift to range-bound trading for a few sessions, a pattern observed in previous market cycles. However, this consolidation is expected to be temporary, with the possibility of another upward breakout in the near future.

Nifty shows strength with a weekly close above the rising channel breakout. Maintain a "buy on dips" strategy above 26,000, targeting 26,500 in the short term.

US stocks open marginally higher after soft inflation report

Wall Street’s main indexes opened higher on Friday, with the S&P 500 nearing record highs, as soft inflation data boosted expectations that the Federal Reserve could shift focus to supporting the labor market and continue cutting interest rates. The Dow Jones Industrial Average gained 52.8 points, or 0.13%, to 42,227.95 at the open. The S&P 500 added 10.0 points, or 0.17%, to 5,755.36, while the Nasdaq Composite rose 38.5 points, or 0.21%, to 18,228.78 at the opening bell.

Important news---

PNB raises Rs 5,000 crore via QIP route

Punjab National Bank on Friday raised Rs 5,000 crore via the qualified institutional placement (QIP) route. The Capital Raising Committee of the state-run lender on Friday allotted over 48.19 crore equity shares to qualified institutional buyers (QIBs) at an issue price of Rs 103.75 apiece.

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06:47:36 PM IST, 27 Sep 2024

China cuts short-term borrowing costs by 20 basis points

China's central bank announced late on Friday that it had reduced the borrowing costs of the standing lending facility (SLF) by 20 basis points across all tenors. The SLF is a loan provided by the central bank to commercial banks to meet their short-term cash needs. The People's Bank of China stated that the overnight rate was reduced to 2.35%, while the seven-day and one-month rates were cut to 2.50% and 2.85%, respectively.

06:12:35 PM IST, 27 Sep 2024

Gold hits another record for third day; silver rates climb Rs 500

Gold prices reached a new record high for the third consecutive day on Friday, climbing Rs 50 in the national capital due to sustained buying by jewellers. According to the All India Sarafa Association, gold continued its upward momentum, rising Rs 50 to a fresh high of Rs 78,300 per 10 grams.

China stocks soar in biggest single-week jump since 2008

China's sudden economic stimulus measures have triggered a strong rally in the country's stocks, marking their largest single-week gain in nearly 16 years. On Friday, the CSI 300 index of major Chinese companies listed in Shanghai or Shenzhen rose 4.5%, ending the week up 15.7%.

Originally posted by: Viswasruti

06:12:35 PM IST, 27 Sep 2024

Gold hits another record for third day; silver rates climb Rs 500

Gold prices reached a new record high for the third consecutive day on Friday, climbing Rs 50 in the national capital due to sustained buying by jewellers. According to the All India Sarafa Association, gold continued its upward momentum, rising Rs 50 to a fresh high of Rs 78,300 per 10 grams.

China stocks soar in biggest single-week jump since 2008

China's sudden economic stimulus measures have triggered a strong rally in the country's stocks, marking their largest single-week gain in nearly 16 years. On Friday, the CSI 300 index of major Chinese companies listed in Shanghai or Shenzhen rose 4.5%, ending the week up 15.7%.

That's because it's their 'Golden week' from next week.

Dalal Street Week Ahead

The market extended its strong northward journey for the third consecutive week as bulls stayed strong over Dalal Street, rising more than a percent despite some selling pressure from FIIs, backed by the rally in auto, oil & gas, metal, and pharma stocks. The weekly gains were also influenced by strong DII inflows, softer oil prices, the previous week's significant fed funds rate cut, and China's economic stimulus.

According to experts, the overall sentiment may remain positive amid likely consolidation, with a focus on Manufacturing & Services PMI numbers, monthly auto sales, US jobs data, and Federal Reserve Chair Jerome Powell's speech in the coming truncated week.

The Nifty 50 sustained above 26,000, rising 388 points or 1.5 percent to hit a new closing high of 26,179, and the BSE Sensex closed above the 85,000 mark for the first time, climbing 1,028 points or 1.2 percent to 85,572. The broader markets continued to underperform benchmarks, with the Nifty Midcap 100 index gaining just 0.3 percent and the Nifty Smallcap 100 index falling half a percent.

"A visible trend is that this rally was predominantly led by large-cap stocks, which are relatively fairly valued compared to mid and small caps, which are showing signs of exhaustion," Vinod Nair, Head of Research, Geojit Financial Services. said.

Globally investors will focus on the speech by US Federal Reserve Chair Jerome Powell on September 30, especially after the substantial 50 bps rate cut in the September meeting. FOMC through its 'dot plot" already signalled a further 50 bps cut in interest rates in the next two policy meetings in the current year, followed by a 100 bps cut in 2025 amid the belief that the risks related to employment and inflation are broadly balanced.

The monthly JOLTs job openings & quits, unemployment rate, non-farm payrolls, vehicle sales, and factory orders data from the US will also be watched.

Domestic Economic Data

On the domestic front, the focus will be on the fiscal deficit and infrastructure output data for August, and current account and external debt numbers for the June quarter of 2024, which are all scheduled on September 30.

In addition, Manufacturing and Services PMI final data for September will be released on October 1 and October 4, respectively. According to preliminary estimates, Manufacturing PMI dropped to 56.7 in September from 57.5 in August, and Services PMI declined to 58.9, from 60.9 during the same period.

Bank loan and deposit growth numbers for the fortnight ended September 20, and foreign exchange reserves for the week ended September 27 will also be released on October 4.

Auto Sales

Auto sales data for the September month from original equipment manufacturers will also be eyed next week. Hence, auto stocks like Maruti Suzuki India, Tata Motors, Ashok Leyland, Hero MotoCorp, Eicher Motors, TVS Motor, Bajaj Auto, Mahindra & Mahindra, Escorts, etc. will be in focus. Most experts expect soft data from all segments.

Technical View

Technically, the overall trend remains positive for the coming week given the continuation of higher highs-higher lows formation and Three White Soldiers formation, although initially some consolidation can't be ruled after the recent strong run-up taking the momentum indicator RSI (Relative Strength Index) near overbought levels on the daily and weekly charts, and given Long-Short ratio rising to nearly 80 percent. On the levels front, the 26,000 is an important support to watch next week, followed by 25,800 being the key support, while the 26,300 is expected to be immediate resistance followed by 26,500 being the key hurdle.